Scott Morrison reveals new details on income tax cuts as Labor votes for full package

Treasurer Scott Morrison has revealed the full cost of the final phase of his sweeping personal tax cuts in a vigorous debate in Parliament that shone new light on the most expensive element of the budget plan.

The new details emerged during an important vote where Labor chose to back the entire seven-year package to avoid being accused of blocking benefits for ordinary workers.

Mr Morrison told Parliament the cost of the policy over 10 years would be $143.95 billion, a slight increase on the estimate of $140 billion aired when the budget was released on May 8.

Treasurer Scott Morrison during Question Time on Wednesday.Credit:Alex Ellinghausen

In a key statement after two weeks of argument over the cost, the Treasurer also revealed the first and second stages of the tax plan would cost $102.35 billion over a decade.

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The two statements suggest the third and most controversial stage of the policy would cost about $42 billion over the same timeframe, the decade to 2028-29, even though this part of the package only starts in 2024.

Labor has called for more detail about the long-term cost of the income tax cuts in order to decide how much of the package to accept in the Senate, but the government has pushed back at those requests and only used the $140 billion estimate.

The new details emerged in the House of Representatives shortly before 7pm on Wednesday when Mr Morrison spoke in favour of the bill while Opposition Leader Bill Shorten and Labor treasury spokesman Chris Bowen sought to move amendments.

Mr Shorten and Mr Bowen tried to amend the bill to delete the second and third stages and restrict the tax cuts to the changes that are due to start on July 1, including a tax offset worth up to $530 a year.

The government used its numbers to reject the Labor amendments and insist that the lower house approve the entire package.

At the final vote, Labor voted in favour of the full bill, which now proceeds to the Senate where it will be subject to extended scrutiny and negotiation over each stage of the reform.

Asked whether the final vote meant Labor MPs were supporting the full package, Mr Bowen told Fairfax Media the vote allowed Labor to keep pursuing changes in the upper house.

"Labor supported passage of the tax cuts legislation through the House so we can continue to make the case in the Senate for splitting the package and supporting Labor's bigger, better and fairer tax cuts," Mr Bowen said.

The Labor stance means it avoids accusations from the government that it has blocked tax cuts, while retaining the scope to seek amendments again in the Senate.

Mr Shorten used his budget reply speech to offer a more generous tax cut in the first stage of the reform while reserving his options on the second and third stages.

Mr Morrison said the Labor criticism of the full package showed the Opposition did not believe in returning money to taxpayers who would be forced to pay higher taxes as inflation increases their nominal pay but not their real earnings.

“They just want to spend it all in a big splurge. At this election the reckless spending will be back from the Labor Party and they’ll be seeking to do it by pilfering the hard-earned savings of ordinary Australians.”

Mr Bowen accused the government of denying help for ordinary workers by voting for the $530 tax offset in the budget while voting against an amendment that would have increased this to the Labor policy of up to $928 for 10 million workers.

"Labor tonight voted to deliver bigger, better and fairer tax cuts for 10 million working Australians. The Liberal Party opposed that," Mr Bowen said in a statement.

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"Labor tonight voted to split the government’s legislation and separate out the tax cuts that occur over the next four years from those that occur in 2022 and 2024. The Liberal Party opposed that.

"Labor tonight urged the Turnbull government, again, to provide year-on-year costs over the medium-term of the seven year tax cut plan. The Liberal Party refused to release it."

Labor said the other information disclosed during the debate was that the government plan for a Low and Middle Income Tax offset (LMITO), due to start next financial year, would costs $11.65 billion over the next four years and $15.9 billion over the decade.

Another measure due to start on July 1, an increase in the $87,000 tax threshold to $90,000, will cost $1.75 billion over the four years and $6.45 billion over the decade.

These two measures make up the first stage of the seven-year plan and go to 10 million workers, although the scale of the benefit varies. About 4.4 million would receive the full offset of $530 under the Coalition and $928 under Labor.